Car insurance is costly for 21-year-old drivers. Find out how to save with our expert advice.
On average, a car insurance policy for a 21-year-old driver will cost $1,584 — about $850 more than the national average. Although a 21-year-old is no longer a teen driver, they’re still considered a risky client to an insurance company. Historical data shows younger drivers are more likely to get into car accidents and receive citations — all of which puts an insurance company at more financial risk and thus they’ll charge more in premium.
Still, there are ways to save as a 21-year-old driver. Let’s breakdown some cheap car insurance providers and other ways to save.
Using a methodology outlined here, we discovered that USAA is the cheapest car insurance company for 21-year-old drivers. At $966 for a standard six-month policy, USAA will set you back $161 per month.
|Car insurance provider||Six-month premium|
If you’re not in the military or related to someone who is, State Farm offers the second cheapest premium at $1,319. This policy will cost you $59 more per month than USAA. Bear in mind, this data should only be considered as a jumping-off point. Your insurance costs can be lower if you’re still on your parent’s policy or if you bundle with renters insurance.
Although 21-year-olds are paying more than the national average, there’s a considerable drop in car insurance premiums from 20-year-olds. On average, 21-year-olds pay $451 less than do 20-year-olds per six-month policy.
Until you get to be 25 or so, gender is still a considerable rating factor for car insurance, especially for young drivers. At age 21, men pay over $400 more per year than women in car insurance costs. Auto insurance companies see young male drivers as statistically riskier than young female drivers and charge accordingly to account for the higher risk. As you age, women actually pay about 1% more for car insurance than men.
Currently, Hawaii, Massachusetts, Montana, and California are the only states which do not consider gender as a rating factor. Furthermore, effective January 1st, 2019, California, Washington DC, and Oregon require non-binary gender options.
While the difference is quite small, car insurance companies see drivers with more education as less likely to get into accidents or file claims. On average, drivers who have a PhD paid $20 less per six-month policy than drivers without higher education.
Currently, California, Massachusetts, Georgia, and Hawaii do not use your education level in calculating your car insurance quote.
Having poor credit, which tends to happen with lots of student loans, will cause your car insurance rate to increase. Data from the Federal Trade Commission shows that drivers with poor levels of credit are not only more likely to file a claim, but their claims tend to be more expensive in value than drivers with higher credit. To an insurance company, this data signals the need for higher premiums in order to protect themselves.
|Credit Tier||Six-month premium|
|Very Poor (300-579)||$1,494|
|Very Good (740-799)||$809|
Currently, California, Hawaii, and Massachusetts do not use your credit score to determine your premium.
Because insurance is state-regulated, any time you move your insurance premium is almost guaranteed to change. Certain zip codes will be rated higher for what an insurance company might see as an additional risk for living there. So, if you live in a state with higher insurance regulations, such as in Michigan, you can expect your premium to be higher.
Although turning 21 does allow you to be considered a more "mature" driver, you’re still considered risky. So, if you insure a vehicle with a high MSRP (i.e., more expensive to replace if you total it) or a vehicle that is capable of high performance or off-road driving, you can expect your premium to be high. If you’re looking to save money, you should consider picking a pre-owned moderate sedan or van.
After covering the rating factors and explaining why it is expensive to have car insurance as a 21-year old, let’s address the best ways to save money without having to cut back on your insurance coverage.
Although you can get a DUI at any age, now that you can legally drink, you should be exceedingly wary of getting a DUI. On average, a DUI will raise your car insurance rate more than $1,000 per year — which doesn’t even begin to cover the myriad of other penalties you will have to pay for. Furthermore, your insurance company will continue to charge you with higher rates for any violations for a total of three years — sometimes longer. In California, you can be charged for up to 10 years for a DUI.
Speeding 11 - 15 MPH Over Limit
Speeding 16 - 20 MPH Over Limit
Speeding 21 - 25 MPH Over Limit
If you’re in college, as many 21-year-olds are, you should consider the good student discount. The age requirements can vary, but most insurance companies still offer this discount to students in your age group. Insurers consider students with above a 3.0 GPA — or "B" average — as more responsible and generally safer drivers. As such, your insurance rewards your good grades with a lower premium. They will usually require proof of your grades every policy period. Combined with a defensive driver discount, you can save an average of $189!
The logic for this is pretty straight-forward. If you’ve taken a professional driving course to become better at defensive driving, you’re more likely to be a safe driver — which is good news to your insurance company. Usually, you can take courses provided by your local DMV but consult your insurance company beforehand to make sure they will honor the discount.
Your renters insurance covers your property and liability in the event something is damaged or you’re found responsible for certain types of damages. Some apartments and landlords actually require you to have renters insurance, which is a good idea anyway — it's useful and very affordable at around $150 per year. So make sure to bundle both your auto and renters policies from the same insurer in order to get a multi-policy discount.
Renter with Multi-Policy
Turning 21-years-old is notorious for usually one thing and it’s not something usually encouraged by your insurance company. Still, turning 21 has other advantages besides being able to order a beer. You can expect around $900 in average annual savings as you begin to appear less risky to your insurance company as a young adult. But make sure you keep a clean driving record, have good driving habits, and especially avoid drinking and driving if you want to keep this lower premium. In addition to this, make sure you shop around for car insurance every six months in order to find the best possible rate.
Whenever you age, move, or — in general — change anything above your driving profile as discussed above, make sure you check to see you’re getting the best rate.